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At the urging of thousands of borrowers and over 220 organizations representing students, workers, and people of color, the Biden-Harris administration just announced an eighth extension to the federal student loan repayment pause. Payments were set to resume in January 2023, after a Trump-appointed judge’s federal injunction blocked the administration’s planned student debt relief program. Now, despite the plan’s popularity, a right-wing backlash takes the case to a conservative Supreme Court next year, where the plan is unlikely to survive.

Why are some politicians and their functionaries so opposed to debt relief? Because debt sustains racial capitalism, through which the powerful maintain white supremacy by creating and exploiting crises for profit. And student loans are the second-largest type of US personal debt, next to mortgages: approximately 45 million borrowers hold $1.74 trillion in student loan debt.

Amid growing debt and a stagnant economy, 2022 has seen a resurgence of student debt activism pushing for total cancellation. After a decade of organizing to move debt cancellation from the margins to the center of national policy debates, the movement to cancel student debt continues to gain ground, as NPQ’s Rithika Ramamurthy documented earlier this year. Debtor-activists, policy scholars, and education advocates all understand that student loans are a growing part of a predatory lending industry that extracts wealth from Black borrowers—especially Black women—and their families and communities. The data is clear: student debt is a racialized form of social control that perpetuates inequality—and cancelling it is necessary for racial and gender justice.


The Problem of Student Loan Debt

As a result of decades of state disinvestment from public education, deregulation of the lending industry, and financialization, student debt has ballooned. The US’ $1.74 trillion in student debt is nearly 8.5 times what it was in 2000. And it’s worsened over the past decade, during which $700 billion—over 40 percent—of student debt accumulated.

For decades, student loans have been a huge moneymaker for the federal government, which holds over 90 percent of all student debt in the US. Given this, it’s unsurprising that the student loan market is notoriously opaque, as Marian Conway observed recently in NPQ, resulting in complicated terms that capitalize on borrowers’ unpaid interest.

Education is promised as a path out of poverty—but it’s also a means of extraction under racial capitalism.

The Biden administration’s broad-based plan—to cancel up to $10,000 for federal student loan borrowers, and up to double that amount for Pell Grant recipients—could relieve millions of borrowers from some or all of the student debt they’ve accrued. In an announcement, the White House said it would “provide relief to up to 43 million borrowers, including cancelling the full remaining balance for roughly 20 million borrowers.”


Jim Crow Debt: How Student Debt Impacts Black Borrowers and Communities

Education is promised as a path out of poverty—but it’s also a means of extraction under racial capitalism. Black borrowers hold the most student loan debt across all racial groups. According to the Education Trust (Ed Trust), a national nonprofit engaged in research and advocacy for educational equity, “Black students are more likely to borrow, borrow more, struggle with repayment, and default on their student loans than their peers.”

Their National Black Student Loan Debt Study outlines the enormity of the student debt crisis for Black borrowers—and why addressing it is critical for racial justice. Led by Dr. Jalil B. Mustaffa, the study was based on a nationwide survey of 1,300 Black borrowers and 100 in-depth interviews with borrowers in various life stages. It was designed to situate the crisis—and proposed solutions—in the lived realities, perspectives, and stories of Black student loan borrowers. Listening to these stories was important because, as Dr. Mustaffa notes as co-author of the NAACP’s Legislation, Policy, and the Black Student Debt Crisis report, even though the prospect of student debt cancellation has entered mainstream policy debates, few—if any—studies have centered the experiences of Black student debtors. In a country that has a growing Black-white racial wealth divide, this is a serious and telling exclusion.

In a report and series of briefs released over the past year, Ed Trust researchers analyzed student debt’s impact on Black borrowers. The report, Jim Crow Debt: How Black Borrowers Experience Student Debt, highlighted four top-level findings:

  1. Student loans are not “good debt”: While student loan debt is typically conceived of as a pathway to higher incomes, wealth, and social mobility, the gains have not been equal for Black borrowers. Credentialization has had a particularly negative impact on Black and Brown borrowers. In Ed Trust’s study, 58 percent of respondents disagreed with the claim that “student loans contribute to racial equality for Black student borrowers,” with many noting “the irony of Black people having to borrow to gain entrée to institutions that promise educational opportunity but have racially excluded them for generations.”
  1. Income-driven repayment (IDR) plans feel like a lifetime sentence: IDR plans provide qualified borrowers with an extended payment plan of 20–25 years instead of the standard 10 and are also used for cancellation through public service loan forgiveness (PSLF). While IDR plans reduce borrowers’ monthly payments, the administrative process is cumbersome and confusing, leading to greater debt—a problem that past reforms haven’t solved. Interviewees described the plans as “shackles on their ankle” or “like Jim Crow,” with the debt preventing them from having full freedom. Ed Trust’s latest brief, How Income-Driven Repayment Plans Fail Black Borrowers, explores this problem in greater detail. 

One story underscores the lifelong impact of student debt on Black borrowers and why repayment plans don’t solve the crisis: Georgia says, “I have worked at a nonprofit for 27 years and have tried to work with my multiple loan servicers to get public service forgiveness. I only get the run around … I tried the Department of Education, my congressmembers. I am 62 years old and do not know how I will retire.” Georgia borrowed $24,000 in 1990. Today, after working throughout her adult life, she owes $125,000.

  1. Limiting student debt cancellation would harm Black borrowers most: Debt cancellation debates frequently center on the question of “fairness” in determining debt relief, with opponents arguing for means-testing by income limits or pointing to graduate degrees as markers of economic prosperity. As Ed Trust points out, however, different racial groups do not have equal access to the same financial means and opportunities. Systemic racism has limited and stolen wealth from Black families, and the push for credentials has increased such families’ debt burden. As a result, many Black borrowers who’ve gone to graduate school in pursuit of higher-paying jobs are set back even further—and without cancellation, they have little hope of ever catching up.
  2. The federal government should cancel all student debt: 80 percent of Black borrowers interviewed supported full cancellation, more than any other type of intervention, as borrowers noted that the system is designed to reproduce racial and economic inequality—a point underscored by their experiences with debt.

In addition to addressing borrowers’ immediate needs, student debt cancellation is vital for racial equity and justice because student debt impacts students’ career choices, denying marginalized communities of color access to critical services like legal aid. As the executive director of the East Bay Community Law Center, Zoe Polk, wrote recently for NPQ about the PSLF program, “Legal aid attorneys like me work to ensure that millions of low-income people of color stay in their homes, are paid fair compensation, expunge faulty criminal records, and access immigration relief. We must be afforded simple, comprehensive pathways to cancel our debt.” Polk’s argument provides an important counterpoint to the twisted logic of state attorney generals, whose lawsuits reveal how they tax young debtors and coerce workers into public service jobs with lower pay by promising to offset the cost of graduate school with loan forgiveness.


Black Women Borrowers and Student Debt

Because of inequitable access to capital, women and people of color hold more student loan debt. The American Association of University Women notes that women hold two-thirds of all US student loan debt. Living at the intersection of racial and gender inequities, Black women are especially impacted by the student debt crisis. According to a Momentive survey for CNBC earlier this year, Black women have the highest rate of student debt at 31 percent, compared to 11 percent of white men, 17 percent of white women, 15 percent of Black men, 10 percent of Latinx men, and 19 percent of Latinx women.

In pursuing higher education’s promise of social mobility, Black women have become the most highly educated demographic group in the US—and the most indebted. Of this, Ed Trust observes the following:

  • Black women are most burdened by the high cost of college, according to Ed Trust’s analysis of data from the US Department of Education, National Center for Education Statistics, and other sources: the cumulative amount of federal undergraduate loans owed by Black women, including principal and interest, is $38,800 and the federal graduate loan amount owed is $58,252.
  • Black women struggle to manage repayment. Black people are the only group that owes more than the amount borrowed on their federal loans 12 years after starting college. Black men owed 111 percent of the amount borrowed. The rate is highest for Black women, whose amount owed is 113 percent of the amount borrowed—double the ratio for white men borrowers (56 percent) and Asians (47 percent for women and 45 percent for men).

Ultimately, as the Education Trust argues, “Student debt is not just a crisis for Black borrowers but the whole country. Racist public policy created it, and we will need bold structural solutions to fix it.” They make several recommendations for addressing the crisis, including the following:

  • The Biden administration should enact broad-based student debt cancellation, which means $50,000 of federal student debt forgiveness, with no limits on eligibility for cancellation.
  • The administration should improve income-driven repayment plans to make payments more affordable, reduce negative amortization, and shorten time-to-forgiveness.
  • Congress should make college more affordable by doubling the Pell grant and making public college free through federal-state partnerships.


A Stronger Power

Though it falls short of activists’ demands for total debt cancellation, the announced Biden-Harris plan was a significant victory for the growing movement to cancel student debt. Racial and economic justice organizers—including groups like Dream Defenders, Movement for Black Lives, and Debt Collective, a debtors’ union advocating for debt abolition—have been at the forefront of this movement. According to Braxton Brewington, press secretary for the Debt Collective, Biden sided with creditors and bankers throughout his career as a senator for Delaware—the epicenter of the US credit card industry. By bringing debtors together and elevating their stories, organizers were able to shift public narratives about debt, mobilize progressive political leaders, and change policy.

With the Biden-Harris plan now stalled in the courts, what can be done to address the student debt crisis?

To ensure that student debtors obtain this long-awaited relief, activists are pushing the Biden administration to go further by using a stronger authority—one that it’s had all along—to cancel all student debt. “Anything less than total cancellation is dragging your feet,” said Brewington. “It paves the way for people on the right to file these frivolous lawsuits that get held up in court—in a system that we know today is illegitimate,” he continued, referring to the US’s politicized judiciary.

That is exactly what happened. The Debt Collective foresaw the challenges the administration would face when relying on the authority of the HEROES Act, which grants the president special powers in the wake of a national crisis—in this case, the pandemic. “The Biden administration has not used all the tools in their toolbox,” says Brewington, who argues that the Higher Education Act of 1965 presents a stronger legal authority for the administration’s debt relief plan—and for total cancellation altogether. Under this act, the owner of the debt, the Secretary of Education on the government’s behalf, has the right to compromise on and settle these debts. As Brewington pointed out in conversation, doing so wouldn’t be unprecedented: the Obama and Trump administrations used this broad and more established authority to provide minor relief to specific groups of student debtors. Short of such sweeping action, debtor-activists are leveraging the power of their collective debts—by refusing to pay them.


Debt Strike: Striking Out Debts for Racial Justice

In response to the debt relief injunction, the Debt Collective has called for a nationwide Debt Strike, encouraging student debtors to join by signing a petition that reads, “I refuse to pay a debt the President promised to cancel. Until the President uses his executive power through the Higher Education Act to cancel student debt for EVERYONE, I am going on debt strike.”

A few days later, Dream Defenders, which organizes Black and Brown youth to build power for their communities in Florida, hosted a Cancel the Loans Now, Joe call to mobilize and share lessons from their organizing. Participants discussed the injunction on student debt relief and what it would mean for them. Diana, a Dream Defenders organizer, reminded the group of how many people were in the same boat: according to federal data, 26 million people applied for the Biden-Harris student debt relief program before the injunction came down, and 16 million were already approved.

The organizers were joined by members of the Debt Collective and representative-elect for Florida’s 10th congressional district, Maxwell Alejandro Frost. A 25-year-old recent two-year college graduate and former national organizing director for March for Our Lives, Frost ran as a progressive Democrat and is the first Gen Z member of the next Congress.

Though their strategies and policy recommendations vary, education policy advocates and debt activists agree on one thing: eligibility limits for debt cancellation and income-driven repayment plans are racially inequitable. As the Brookings Institution’s Andre M. Perry and Carl Romer write, for Black Americans, “a lack of generational wealth risks making student debt a long-term financial burden.” Income is not wealth, and Black women and other marginalized groups are often denied access to credit, as Dr. Shamell Bell, an education professor and Debt Collective organizer, pointed out—alongside advocates from Black Girls Vote, Higher Heights for America, and the National Alliance for Mental Illness—in an Ed Trust webinar last August on Black women’s student debt and its impact on mental health. This lack of credit along with debt prevents Black women and their families from building wealth through savings and assets that serve as investments, like homes—as discussed extensively in NPQ.

As activists also pointed out, incomes aren’t “individual” for many BIPOC: those who earn higher wages often provide financial support to their families that isn’t tax-deductible, as “dependents” and “charitable” contributions are for white owning-class taxpayers.

Failing to follow through on broad-based debt cancellation will have a significant economic and political impact for years to come. In the report, Voters Demand Student Debt Cancellation, Data for Progress and the Student Borrower Protection Center polling shows that, if payments resume, debtors anticipate spending less on necessities like food and housing, while saving less for short-term emergencies and long-term goals. Without savings, debtors are forced to accrue additional debt—credit card, auto, mortgage, medical—to cover everyday needs while paying down loans. This prevents communities of color from saving and transferring wealth across generations. To this end, Perry and Romer argue:

The Biden plan would have significant impact for many families (according to a study done by the Obama White House, two-thirds of defaults occurred in households with less than $10,000 in student debt), but it would not have the ameliorative racial wealth effects that larger cancellation policies would have. Because the effects of student debt disproportionately lie along lines of race and wealth, any debt cancellation effort would do well to consider the effect of intergenerational wealth on student debt. If implemented correctly, student debt cancellation could be a powerful tool in dismantling institutional discrimination by shrinking racial wealth disparities.

Finally, these social and economic considerations are also tied up with a political one that progressive Democrats can use to push President Biden to ensure that student debt relief isn’t just a footnote in the story of 2022. As filmmaker and Debt Collective organizer Astra Taylor writes in The Guardian, failing to deliver on a major promise that energized and drove young voters and voters of color to the polls during the presidential and midterm elections will undermine the Democratic Party—and democracy’s future—in 2024.


Conclusion: Who owes what to whom?

Cancelling student debt is a concrete step towards redressing the havoc wreaked by the federal student loan monster—and its perpetuation of the US’ racial wealth divide.

Student debt cancellation doesn’t fix racial capitalism. Wiping out current debts doesn’t eliminate the racist policies and systems that created the crisis, nor does it end the debt-financing of education, housing, and healthcare. Without further measures—such as making public higher education free, as Alí Bustamante of the Roosevelt Institute argues in a recent NPQ article—future graduates will contend with another trillion dollars of debt.

Still, cancelling student debt is a concrete step towards redressing the havoc wreaked by the federal student loan monster—and its perpetuation of the US’ racial wealth divide through predatory loans that entrap communities of color in a never-ending cycle of debt. The hypocrisy of the US government requiring loan repayment in a country built by enslaved Black people on lands stolen from Indigenous people is not lost on debtor-activists and policy advocates. “Reparations is a debt that needs to be paid,” says Brewington.

Student debtors cannot wait any longer—not for the pious charity of a payment “pause” or even partial, temporary “forgiveness.” To achieve racial justice for Black, Brown, and Indigenous communities, the time to cancel student debt is now.